Product Life Cycles

1. Principles of Marketing Unit 5 Product Life Cycles Instructor: Safaa S. Y. Dalloul

2. Elements of Lecture • Product Life Cycle PLC • Marketing Strategies: Introduction Stage and the Pioneer Advantage • Marketing Strategies: Growth Stage • Marketing Strategies: Maturity Stage • Marketing Strategies: Decline Stage • The Product Life-Cycle Concept: Critique

3. Product Life-Cycle Marketing Strategies

4. Products Characteristics • Limited life. • Product sales pass through distinct stages • Profits rise and fall. • Products require different strategies.

5. Product Life Cycle

6. Growth-Slump-Maturity • Sales grow rapidly when the product is first introduced and then fall to a "petrified" level that is sustained by late adopters buying the product for the first time and early adopters replacing the product. • For Example products of small kitchen appliances such as handheld mixers and bread makers.

7. Cycle-Recycle • The pharmaceutical company aggressively promotes its new drug, and this produces the first cycle. • Later, sales start declining and the company gives the drug another promotion push, which produces a second cycle (usually of smaller magnitude and duration).

8. Scalloped • Sales pass through a succession of life cycles based on the discovery of new-product characteristics, uses, or users. • The sales of nylon, for example, show a scalloped pattern because of the many new uses parachutes, hosiery, shirts, carpeting, boat sails, automobile tires—that continue to be discovered over time.

9. Style, Fashion, and Fad

10. Product Life Cycle • Product Development Product development begins when the company finds and develops a new product idea. During product development, sales are zero, and the company’s investment cost mount

11. Introduction Stage and the Pioneer Advantage

12. Product Life Cycle • Introduction Stage • Why the sales in the introduction stage are slow? • Take time to roll out a new product • Work out the technical problems • Fill dealer pipelines • Gain consumer acceptance

13. Product Life Cycle • Introduction Stage • Highest Promotional expenditures to: • Inform potential consumers. • Induce product trial. • Secure distribution in retail outlets.

14. Product Life Cycle • Pioneer Advantage • To be first can be rewarding, but risky and expensive • Most studies indicate that the market pioneer gains the most advantage.

15. Product Life Cycle • Introduction Stage Sales Low sales Characteristics Costs High cost per customer Profits Negative Innovators Customers Competitors Few

16. Product Life Cycle • Introduction Stage Marketing Objectives Create product awareness and trial Marketing Objectives

17. Product Life Cycle • Introduction Stage Strategies Product Offer a basic product Price Use cost-plus Build selective distribution Distribution Build product awareness among early adopters and dealers Advertising Sales Promotion Use heavy sales promotion to entice trail

18. Growth Stage

19. Product Life Cycle • Growth Stage Characteristics Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Customers Early Adopters Competitors Growing Number

20. Product Life Cycle • Growth Stage Marketing Objectives Marketing Objectives Maximize market share

21. Product Life Cycle • Growth Stage Strategies Product Offer product extensions, service, warranty Price Price to penetrate market Distribution Build intensive distribution Build awareness and interest in the mass market Advertising Sales Promotion Reduce to take advantage of heavy consumer demand

22. Product Life Cycle • Growth Stage • What are the several strategies that the firm uses to sustain rapid market growth? • Improves product quality and adds new product features and improved styling. • Enters new market segments.

23. Product Life Cycle • Growth Stage • What are the several strategies that the firm uses to sustain rapid market growth? • Adds new models and flanker products (i.e., products of different sizes, flavors, and so forth that protect the main product). • Increases its distribution coverage and enters new distribution channels.

24. Product Life Cycle • Growth Stage • What are the several strategies that the firm uses to sustain rapid market growth? • Shifts from product-awareness advertising to product- preference advertising. • Lowers prices to attract the next layer of price-sensitive buyers.

25. Maturity Stage

26. Product Life Cycle • Maturity Stage Stable • 3 Phases • Sales flatten. • Most potential consumers have tried the product, and future sales are governed by population growth & replacement demand. Growth • The sales growth rate starts to decline. • No new distribution channels to fill. Decaying • The level of sales starts to decline • Customers begin switching to other products

27. Product Life Cycle • Maturity Stage • In maturity stage what happen when the sales slowdown in the industry? And how the competitors will act? Discuss

28. Product Life Cycle • Maturity Stage • Compare between quality, feature, and style improvement?

29. Product Life Cycle • Maturity Stage Characteristics Sales Peak sales Costs Low cost per customer Profits High profits Customers Middle majority Competitors Stable number beginning to decline

30. Product Life Cycle • Maturity Stage Marketing Objectives Marketing Objectives Maximize profit while defending market share

31. Product Life Cycle • Maturity Stage Strategies Product Vary brand and models Price Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits Sales Promotion Increase to encourage brand switching

32. Decline Stage

33. Product Life Cycle • Decline Stage Characteristics Sales Declining sales Costs Low cost per customer Profits Declining profits Customers Laggards Competitors Declining number

34. Product Life Cycle • Decline Stage Marketing Objectives Marketing Objectives Reduce expenditure and milk the brand

35. Product Life Cycle • Decline Stage Strategies Product Phase out weak items Price Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers Sales Promotion Reduce to minimal level

36. Product Life Cycle • Decline Stage How the company can overcome the decline stage?

37. Product Life Cycle • Critique | Analysis • The PLC concept helps marketers interpret product and market dynamics. • It can be used for planning and control, although it is useful as a forecastingtool. Advantages

38. Product Life Cycle • Critique | Analysis • Product-life-cycle patterns are too variable in shape and duration. • Marketers can seldom tell what stage the product is in a product may appear to be mature when actually it has reached a plateau prior to another upsurge. Disadvantages Note: Critics put those disadvantages of PLC theory

39. Homework • List and define the steps in the new-product development process? • Coca-Cola has sustained success in the maturity stage of product life cycle for many years. Visit Coca-Cola’s website and discuss how coca-cola has evolved over the years. Identify ways that coca-Cola can continue to evolve to meet changing consumer need and wants.